Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

Life imitates art big time with Zelenksyy’s Servant of the People re-airing on Netflix

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The accidental politician: ex-comedian and now Ukraine president Vlodomyr Zelenskyy.

Netflix is again showing the popular Ukraine TV show,  Servant of the People, which of course stars Ukraine president Volodmyr Zelenskyy.

Here’s Wikipedia’s summary of the show, which it categorizes as political satire. [I’m using its spelling of his surname, which seems to vary by media outlet]

Airing first in the Ukraine in 2015, Netflix originally ran the show’s four seasons between 2017 and 2021 [with English subtitles]. Evidently interest has been rekindled by Zelenskyy’s Churchillian fight against Russia’s mad dictator, Vladimir Putin.

Last week, Netflix announced Season 1 of the series  was back. There are 23 episodes in the opening season, most of them about 25 minutes, although the pilot episode is twice that length.

I had missed it when it first came out but was keen to watch in light of the profile the war has generated for Zelenskyy. I’d be surprised if millions of Netflix viewers don’t think similarly and propel the show to the top of its rankings.

Based on the first nine episodes I’ve seen, it’s fascinating to see a modern democracy and actual shots of Kiev and other parts of a beautiful Ukraine as it was a few years before the February 2022 invasion: the highways and late-model cars, young people embracing social media, smart phones, Skype and Zoom calls and even crowdfunding for the teacher’s political campaign: talk about life imitating art! At one point, after a kiss, one character declares “I have to tweet this!” There are plenty of shots of TV news standup reports so familiar to North American viewers of CNN or Fox 24/7 cable news.

All of which makes a stark contrast with Russia’s current post-invasion Iron Curtain on independent media and social media, where the only sources of information are state-sanctioned television believed only by older Russians who aren’t technology literate. See a recent New York Times piece on the thousands of tech-savvy young Russians fleeing the country for Armenia and other parts of western Europe, where they gather in cafes with their Apple laptops and Smartphones.

“Shockingly prescient”

With the benefit of hindsight, it’s heart-wrenching to see so much foreshadowing of the calamity to come in the show’s occasional references to Russia and even to Putin himself in the opening episodes. At one point, the TV president says “Putin has been deposed,” quickly adding “I was kidding.”

Then, in episode 7, one character portrays the Zelenskyy character’s options as “to flee or to stay.”

Little wonder that in its review of the series last week, the Daily Beast describes it as “shockingly prescient.”

For those who are new to the series, here’s one website’s brief plot description:

“After a Ukrainian high school teacher’s tirade against government corruption goes viral, he soon finds himself sitting the president’s seat.”

Zelenskyy played a history teacher named Vasily Petrovych Goloborodko.  But life began to imitate art in earnest early in 2018, when a political party named after the television series was registered with the Ministry of Justice. In real life, Zelenskyy was elected President of Ukraine in April 2019, with more than 70 per cent of the second-round vote. Continue Reading…

Retirement Readiness: The investment fee gap can set retirement back four years

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By Jillian Kennedy, Mercer Canada

Special to the Financial Independence Hub

If someone said you could have four extra years to enjoy your retirement, you’d probably be thrilled. Now imagine being forced to hold off on retirement for four years longer than you planned. 

As it turns out, a gap in investment management fees can potentially make that a reality for many Canadians – but there is a fix.

Our newly released 2022 Mercer Retirement Readiness Barometer analyzed the various investment management fees in the market and their impact on retirement readiness. What we found is that someone paying the median level of fees for an individual investment account – 1.9% – would have to wait until age 70 to be retirement ready. Obviously, that’s well past the traditional retirement age target of 65 that many of us have in our sights.

 

It’s a different story if you consider the benefits of a workplace defined contribution (DC) plan. An individual paying 0.6% in fees – the median for a DC savings plan – would be ready for retirement four years sooner, at age 66. (The analysis assumed individuals are invested in a “balanced” target date portfolio with a 12% combined contribution rate – with 6% coming from the employee and 6% from the employer).

Those who have access to a workplace DC and savings plan can benefit from pooling power and lower fees in a group arrangement. Personal finance experts have commented for years on this fee disparity between group workplace plans and other investment savings vehicles, but this analysis puts that into clear perspective. Consider not only shaving years off your working life but having a better quality of life in the retirement years that follow.

The fee gap’s impact before – and after – retirement

This gap in fees doesn’t only affect the savings phase, but also the period after someone begins to draw from their retirement savings. It’s common to move retirement savings from a workplace plan into an individual account and at that point, higher fees tend to kick in.

Take, for example, an individual retiring at 65. Our analysis shows that if that person pays the median retail fee (1.9%) when they begin drawing money from their individual retirement savings account, they’ll run out of money five years earlier compared to someone paying the median group fee of 0.6%. 

If someone is paying the median group fee (0.6%) throughout their career, on the other hand, then retires at age 65 and subsequently invests their nest egg in an account paying that same rate, they will have an average of 12 more years of retirement income compared to a similar person paying the median retail fee (1.9%) over the same period.

Group pooling is a powerful tool

Of course, successful retirement income planning takes a comprehensive approach including workplace savings programs, government benefits and personal savings. Higher contribution levels and a smart investment strategy also play an important role, as does money management post-retirement.  Continue Reading…

9 Financial Literacy Basics to help with Retirement

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What are the basics of financial literacy that can help with retirement? 

To help professionals gain financial literacy to understand their retirement future, we asked business professionals and finance experts this question for their best tips. From attending financial workshops to creating a roadmap for your unique needs, there are several financial literacy basics to help you plan your retirement. 

Here are 9 financial literacy basics to help with retirement: 

  • Attend financial workshops
  • Talk to an attorney about Estate Planning
  • Books on Financial Literacy
  • Reach out to your Insurance Providers
  • Consult a Certified Financial Planner
  • Talk to a Budgeting Coach
  • Start researching
  • Customer Support for IRAs often is of high quality
  • Create a roadmap for your unique needs

Attend Financial Workshops

Financial literacy helps workers understand what avenues are available to build wealth for retirement. 401ks and Roth IRAs are valuable means of building passive income streams to grow nest eggs. However, there are many means of saving for retirement. Financial education can make professionals aware of available approaches and can help these individuals build a combination plan to manage finances. One way aspiring retirees can learn more is to attend financial workshops offered through community programs or workplaces, especially if these events provide the chance to ask an expert questions. –– Tasia Duske, Museum Hack

Talk to an attorney about Estate Planning

Estate planning is heavy business, as it involves creating a plan for everything you want to happen after your death. This can include details about inheritance, funeral arrangements, and so on. When made with an attorney, the right estate plan will ensure that these important tasks are completed correctly the first time. Doing this can save your family significant additional stress after you’ve passed. — Carey Wilbur, Charter Capital

Read relevant books on Financial Literacy

If you are retired or approaching retirement, get some books about personal finance. Consider these books an investment in your future. A solid library of books on financial literacy can help you to build financial awareness and navigate retirement. Being financially literate will give you the knowledge you need to make sound financial decisions now, and help you maintain control of your finances once retired. — Henry Babichenko, European Denture Center

Reach out to your Insurance Providers

It’s important that retirees utilize every financial resource they have, and insurance providers are one such resource. Make sure all of your personal information is up to date, especially regarding your beneficiaries. While every insurer is different, don’t be afraid to get in touch with any questions you have. You should always feel free to ask your insurance provider questions you have about payouts, payments, and packages that could save you or your loved ones money. — Vicky Franko, Insura

Consult a Certified Financial Planner

Retirees need financial security to live happy and fulfilling lives after retirement. It is important to make a plan for your living arrangements, income, and expenses as soon as possible to avoid financial trouble down the road. A Certified Financial Planner can help you make a sound financial plan that fits your needs and goals. Seek out a CFP’s help so you can enjoy retirement to the fullest. — Brian Greenberg, Insurist Continue Reading…

Growth Opportunities in Challenging Times

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Franklin Templeton/iStock

By George Russell, Institutional Portfolio Manager, Franklin Equity Group

(Sponsor Content)

The first few years of the 2020s have been challenging, to say the least.

Just as optimism was building that the worst days of the pandemic may be behind us, war in Eastern Europe erupts. Hopefully the conflict in Ukraine can find some sort of resolution sooner rather than later, but it’s a worrying time for sure.

Amid the geopolitical turmoil, markets have experienced some wild swings so far in 2022. The conflict in Ukraine has created extra uncertainty for investors who were already concerned about runaway inflation levels, and what higher interest rates may mean for their portfolios. The Bank of Canada has announced its first hike since 2018, and the expectation is that more increases are to follow throughout 2022.

In this tumultuous environment, Growth stocks have had a difficult time. While the first year of the pandemic largely benefited Growth names, particularly in the tech space, there has been a reversal of fortunes in recent months. As inflation concerns increased hawkish sentiment among central banks, a Growth to Value rotation occurred across markets. The question many investors are now asking is just how much the U.S. Federal Reserve or Bank of Canada  will ultimately raise rates.

This decision will  be contingent on whether inflation continues at such a rapid rate, which won’t be helped by higher energy prices arising from the war in Ukraine.

Permanent or Temporary Change?

U.S. consumer prices were up 7% year-over-year at the end of 2021, a 40-year high, while Canada’s 4.8% annual inflation at the end of the year marked a 30-year high. In his recent paper on the subject, Franklin Innovation Fund portfolio manager Matt Moberg identified two main themes that will dictate market performance this year: which companies have experienced permanent change due to the pandemic, and the duration and magnitude of inflation. Continue Reading…

What Is a Credit Utilization Ratio and why does it matter?

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By Mihika Ghosh

Special to the Financial Independence Hub

Credit agencies use the credit utilization ratio to understand your credit score. The credit utilization ratio is your total credit to your total debt amount expressed in a percentage format. In simpler terms, it refers to the amount of debt you carry in all your credit cards.

Your credit utilization ratio increases and decreases based on the payments and purchases you make. It is one of the factors that help credit bureaus calculate a credit score and makes up 30% of your credit score. Hence, it is vital to keep your credit utilization ratio as low as possible to avoid debts and maintain good credit scores.

Why does your Credit Utilization Ratio matter?

A high credit ratio negatively impacts your credit score rating process and indicates that the borrower is not great at managing their credit. At the same time, a low credit ratio implies excellent credit management skills.

There are two important factors in maintaining a good credit score – first is your payment history. Late payments and abundant due payments can negatively impact your credit score. The second factor that lays of great importance is your credit utilization ratio. If you are trying to land in the good books of the lender, you need to build good credit by keeping your credit ratio as low as possible.

Most credit experts recommend you keep your credit ratio below 30% to maintain a good credit balance.

How to Calculate your Credit Utilization Ratio 

First and foremost, start by pulling up all your credit cards together, then add up all of your outstanding balances along with your credit limits. Take this figure and then divide it by your total credit limit and multiply it by 100. Your answer will be your total credit utilization ratio which will come out in percentage.

Note that your credit ratio is not the sum total of each of your credit card’s credit utilization ratios. Hence, it is important to calculate the total credit of all your credit cards.

However, if this calculation method is still too complicated for you, or you would just want to let calculators do the math, there are plenty of online credit utilization calculators that can assist you.

How to Improve your Credit Utilization Ratio

Lowering your credit utilization ratio is easy and one of the quickest ways to boost your credit score. Here are a few ways in which you can get started:

  1. Pay All Your Debts

The best way to improve your credit ratio is by paying off any pending credit card balances. Every dollar you pay reduces your credit ratio and total debts, in turn getting you one step closer to a good credit utilization ratio. This even reduces the baggage of interest you had to pay on those balances. Continue Reading…